Dilute magnetic semiconductor (DMS) nanoparticles of Co-doped Zn0.95Cr0.05O were synthesized by the sol-gel auto-combustion technique. Crystallographic analysis was made by using the X-ray diffraction (XRD) technique. Rietveld refined X-ray diffraction patterns confirm the single phase wurtzite type crystal structure with space group p63mc. Replacement of larger Zn2+ ions by smaller Co2+ reduces the lattice parameters ‘a’ and ‘c’. Average crystallite estimated from the Scherrer equation is found to increase from 17.6 to 22.0 nm with the addition of Co2+ ions. Scanning electron micrographs (SEM) were used to understand the surface morphology of the samples. The average grain size obtained from SEM analysis is observed in the range of 22.1 to 26.5 nm. Enriched ferromagnetism is observed for Co2+ doped samples and the saturation magnetization increases from 0.0514 to 0.1026 emu/gm. At the lower frequency region, both dielectric constant (ε') and dielectric loss tangent (tan δ) have higher values and decrease with increasing frequency and become almost constant at the higher frequency region. The energy band gap (Eg) decreases from 3.26 to 2.69 eV with the addition of Co2+ ions in Zn-Cr oxides. Enriched ferromagnetism and higher dielectric constant at low frequency make these materials suitable for spintronic devices.